Structural cracks in Rebuilding Ireland?
Published 06/11/2016 | 02:30
This week it was announced that 1,014 families are now in emergency accommodation, mainly hotels, in Dublin. Nationally over 6,709 people are deemed as homeless. Children make up 2,426 of this figure and 75pc of the overall total is based in the capital.
The Government strategy on housing released in July stated: "Our aim is that by mid-2017, hotels will only be used for emergency accommodation in very limited circumstances." It went on to say: "A total of 1,500 rapid-build units will be delivered by 2018 - 200 by end 2016, 800 in 2017 and the remainder in 2018."
This is where the cracks start to appear. To date, 22 rapid-build houses have been completed in 2016, 89pc less than promised only four months ago. The new 'official line' is that on-site development of 320 units will have commenced by the end of the year. What does on-site actually mean? Parking a digger at the entrance? A total of 1,000 rapid-build units will therefore be required to be completed in 2017. That is a difficult target.
The challenge is significant for the Government - however, who are already off target just a few months into the strategy.
The question has to be asked: why is 'rapid housing' costing more to construct than a traditional home - especially when it only has a lifespan of 60 years? The advantage supposedly is the speed of construction as sections arrive on-site already complete. But now it seems that the biggest delay takes place long before construction ever starts.
The two most practical solutions to this crisis are as follows: firstly, a complete overhaul of the pedantic planning process and its inadequacies and not just the introduction of a fast-track planning process for large developments. Secondly, the delivery and construction of large numbers of social housing units by Government. Just 101 units have been built this year. The initial plan was to deliver 5,000 a year by 2021. While it is still early days in terms of the strategy, the real concern is that this much heralded plan for housing is starting to show cracks.
Here's hoping the cracks are superficial, not structural.
In light of the acute shortage of housing, especially in larger urban areas, it's worth looking at the international trend towards 'container living'. What is it and could it catch on here?
Well, It does exactly what is says on the, er, container, ie, it's the conversion of shipping containers into living accommodation.
Container conversions have huge potential advantages, not least the speed of delivery. And the fact that there are over two million unused containers lying idle around the world. The units can be connected together like Lego and put in place in a matter of days.
A traditional shipping container measures approximately 12.2m x 2.4m or 15sqm - less than the minimum 45sqm currently permitted for an apartment in Dublin.
Yet, average household sizes are falling all the time as new millennials, mainly in cities, gravitate to more independent living. They are less focused on the size of their living space and more on the efficient use of the limited space they occupy. Where a larger area is required these boxes can also be interconnected.
Furthermore, the likely costs are up to 25pc less than those of traditional construction - a significant saving. However, what is not clear is how they would be viewed by potential financiers as they are not 'fixed' but portable structures without foundations. However, perhaps financial institutions would adapt in time, especially if there are government incentives to do so.
If they did catch on, our housing crisis could be solved very swiftly.
New builds in 2016
The figure for national house completions is likely to hit 15,000 for 2016, which would be up 18.4pc on the total for 2015. Based on the actual figures from the Department of Housing for the eight months to end August, the figure is up 19pc on the same period last year. This is the highest number of house completions since 2010 when they hit 14,100 for the year.
The total figure comprises both one-off housing and houses in developments, with the former making up approximately 38pc of the total - as Ronan Lyons explores below. I estimate the total figure of new homes for Dublin will be 4,000 units, well short of the 8,000 required. We are moving in the right direction albeit at walking pace.
Davy Stockbrokers have upped their predictions for overall house price increases for 2016 from 6pc to 7pc. Cathal Mac Coille, economist with Davy, also predicts further increases of 7pc for 2017, 6pc for 2018 and 5pc thereafter.
I would concur as there are two significant drivers of price increases here for the short- to medium-term. The recent incentives for FTBs introduced in the Budget will only increase pressure on prices especially in cities. However, an even more significant factor is the number of planning applications that have been lodged for new homes in the year to date. This figure is down 20pc on 2015. Even with the fast-track planning process introduced by Minister Coveney for developments of over 100 units, it will still take a minimum of 18 months to bring a development from application to completion and occupancy stage. This brings us back to the prime source of all of the problems in the housing sector - the supply of homes for owner occupiers and renters.
It seems that two groups will be going North for the rest of 2016 and 2017 - Christmas shoppers in search of bargains and house prices.
New DG for SCSI
A new director general has been appointed to the Society of Chartered Surveyors Ireland (SCSI). Aine Myler replaces Patricia Byron who joined the organisation in 2015. With over 25 years experience as a chartered valuation surveyor in and around the Dublin area, Aine has huge knowledge and experience of both the industry and profession. She served as president of the Irish Auctioneers and Valuers Institute in 2009, before its merger with the SCS, and has served on a number of professional panels within the SCSI. She was appointed director of operations in January this year.
The very best of luck to her in her new position.
Philip Farrell is a market commentator and property consultant